2004 (7) TMI 419 - AT - Central Excise

Summary

Issues:
1. Appellants clearing goods at incorrect duty rate.
2. Claiming recredit of excess duty in Modvat account.
3. Dispute over penalty imposition.

Analysis:
The case involved the appellants clearing goods to a customer at a higher duty rate by mistake, resulting in an excess payment of duty. The customer, NML, rightfully claimed Modvat credit based on the invoice issued. The appellants, without filing a refund claim, unilaterally took recredit of the excess duty in their Modvat account and informed both the department and NML about it. The authorities disapproved of this action, leading to a demand of Rs. 25,523 against the appellants, with a penalty initially set at Rs. 5,000 but reduced to Rs. 500 by the first appellate authority.

Upon review, it was observed that NML had acted correctly in claiming the Modvat credit, and the appellants had the option to claim a refund for the excess duty paid. However, instead of following the proper refund procedure, the appellants directly recredited the amount in their Modvat account and requested NML to reverse the excess credit, which NML did not do. This unilateral action by the appellants did not impact the Revenue, and the case fell under Rule 57E of the Central Excise Rules, 1944.

The judgment highlighted that if the appellants had claimed a refund as per the law, the Central Excise Range Superintendent could have facilitated the recovery of the equivalent duty amount from NML. The appellants' failure to follow the refund process was deemed repugnant to Rule 57E. While upholding the duty demand due to the appellants' actions, no penalty was imposed considering the absence of mala fides. The decision set aside the penalty and left open the option for the appellants to claim a refund if eligible under the law, ultimately disposing of the appeal.